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e Decree 166 allows to avoid import duties on components in echange for the gradual localization of the products Duration of validity • Greenfield – 8 years • Brownfield–7years Tariff duties for the import of components Decret 166 – "Industrial assembly" (April 2005) • From Ø 14.5% to Ø2%(weighted average 2) ) Required investment • No minimum investment Requirements on the production volume Requirements on manufacturing content Local content requirements 1) • Minimum production capacity 25,000 units/a (2 shifts) – no regulation on actual production output • Welding/Painting/Assembly – Greenfield 30 months after SOP 3) – Brownfield 18 months after SOP 3) Local integration targets as reduction in value of the standard component list (can be achieved through paying regular duties on the components) • 10% – 24 months after SOP 3) • 20% – 42 months after SOP 3) • 30% – 54 months after SOP 3) Examples • SOK (KIA), SeverstalAuto (FIAT) • Planned: Renault , Toyota, Volkswagen Further requirements "Hard" requirements: • Applying company must be a Russian legal entity • Yearly reporting to Russian authorities • Usage of imported components (at reduced duties) only for industrial assembly Can be changed: • Project itself (greenfield or brownfield) • Business plan • Production plan and production output • Investment value 1) Based on (supplier) ex-works value of imported components 2) Based on an average C class car cost structure 3) SOP means in this case start date of the agreement Source: Russian tariff regulation; Ministry of economic development and trade, Interviews MUC-90007-497-09-03-E.ppt 36
e Decree 566 and additions to decree 166 also reduce import duties on parts for component assembly Additions to decree 166 and decree 566– "Industrial assembly of components" (September/October 2006) Duration of validity • Up to 7 years for engines, gear boxes and transaxles • Up to 5 years for other components Tariff duties for the import of components • Tariffs for industrial assembly down to 0-5% (some components at 10%) Required investment • No minimum investment Requirements on the production volume • Only for transaxles – Min. capacity of 5,000 units/a (2 shifts) Requirements on • For transaxles content 1) – Assembly and control operations manufacturing – Axle case mechanic processing • For other components – Processing – Assembly and control operations Local content requirements 2) Local integration targets as reduction in value of the standard component list (can be achieved through paying regular duties on the components) • 10% – 18 months after SOP • 20% – 30 months after SOP • 30% – 40 months after SOP 1) Some operations can be performed in cooperation with other company in Russia 2) Based on (supplier) ex-works value of imported components Source: Russian tariff regulation; Ministry of economic development and trade, Interviews MUC-90007-497-09-03-E.ppt 37
Page 1 and 2: DRAFT - 20070204 Opportunities in R
Page 3 and 4: A. Roland Berger MUC-90007-497-09-0
Page 5 and 6: We are a top player in the Consulti
Page 7 and 8: For more than 10 years we have serv
Page 9 and 10: Roland Berger Strategy Consultants
Page 11 and 12: Boosting sales in Russia - Individu
Page 13 and 14: Determining market potential and de
Page 15 and 16: Overview • Traditional markets ar
Page 17 and 18: RUSSIA Truck in Russia market will
Page 19 and 20: Especially in the MDT and HDT marke
Page 21 and 22: Some OEMs are already active in the
Page 23 and 24: The low cost trucks in emerging mar
Page 25 and 26: Russia is the largest market for tr
Page 27 and 28: RUSSIA For the last 5 years shares
Page 29 and 30: Entering the market with a strong p
Page 31 and 32: c In the mid term, local suppliers
Page 33 and 34: c Products and know-how of Russian
Page 35: d The Leningrad Region offers the m

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